What is a non-appropriation clause and why is it important?

A non-appropriation clause enables the agency to terminate the finance agreement at the end of the current appropriation period without further obligation or penalty. This may be done only in cases where the agency was unable to obtain funding for future payment obligations. Essentially it’s an annual out clause.

The reason this is important is that the non-appropriation clause enables the agency to account for the asset obligation as a current expense instead of long term debt so no voter referendum is required for the funding.